Deposit guarantee

Q&A: Q I have a lump sum that I was looking to deposit in Bank of Ireland. But I am nervous after the reports of the bank's chief Brian Goggin leaving and the shares falling. Is it safe to put the money into Bank of Ireland? I had it with Anglo Irish Bank but I took it out after all the trouble there. Ms D.W., Dublin

AI am getting quite a few calls and letters from people nervous about the state of their savings with one or other of the Irish banks.

People need to remember that the Government announced last September that it would guarantee the savings held by depositors in any of six Irish banks and building societies – AIB, Bank of Ireland, Anglo Irish, Permanent TSB, EBS and Irish Nationwide – for two years, ie until September 2010. Other banks operating here, such as Ulster Bank, First Active, KBC, National Irish Bank, Northern Rock and Rabobank are covered by guarantees in other countries such as Britain, Belgium, Denmark and the Netherlands.

So your money is safe, regardless of the departure of any or all of the executives of Bank of Ireland. The fact that Mr Goggin has announced his retirement from this June will in no way affect the security of your savings.

For what it’s worth, your money would have been equally safe had you left it in Anglo Irish Bank. The fact that that bank has since been nationalised in no way undermines the State guarantee.

The only threat to your money would be if the State itself were to default on its borrowings. For all the worry about potential ratings downgrades and the worsening state of the economy, there is no suggestion of such an event.

Your money is safe and you should continue to chase the best savings rate available.

Q With ref to your response to a recent query concerning the Government guarantee of savings in Anglo Irish, does the Government guarantee cover the current value of funds, ie capital plus interest, or only the original capital value?

Mr. E.B., Dublin

AThe State guarantee covers all deposits in each of the six institutions listed above. That would include the original capital sum deposited and any interest that has since accrued.

HomeBond

Q I have a query re HomeBond. Who is ultimately responsible for ensuring HomeBond honours its obligations to the householder under its HomeBond Guarantee Scheme?

B.M., email

AHomeBond is essentially a group providing insurance cover on new homes against major structural defect. However, I can see your difficulty. Finding someone to talk to – or even the name of someone who will talk on their behalf – is almost as difficult as getting an invitation to the top table of Barack Obama's inauguration ball. This is not a group that does open, easily accessible consumer service.

It operates in slightly different ways, depending on whether your home was completed before or after October 31st last year. For properties completed before then, you first have to take your complaint to the builder. Only if that does not lead to a satisfactory conclusion will HomeBond consider your claim.

Claims for properties completed since October 31st last year are dealt with directly through HomeBond.

The ultimate underwriter of the insurance policy is Allianz, one of the large international insurers – and the product is registered with the financial regulator and an insurance “intermediary” – an insurance broker to you and me.

In the event of a complaint, as with any financial services firm, the first thing you need to do is work through HomeBond’s internal complaints procedure – in writing. If that gets nowhere, you next need to make a formal complaint, again to the company itself.

Only if you still receive no satisfactory resolution on the issue do you move outside the firm, in this case to the Financial Services Ombudsman.

Setting up ARF

Q I am due to retire this year. I have been making Additional Voluntary Contributions (AVCs) with Eagle Star. I am eligible to put these contributions into an Approved Retirement Fund as I already have a pension of about €15,000 a year. How do I go about this? Do I seek paid financial advice and how will I know what the best option is?

Ms J.M., Dublin

AAnyone paying Additional Voluntary Contributions into their pension has the flexibility to put that money into an Approved Retirement Fund (ARF) when they retire, as long as they have minimum guaranteed pension income of €12,700 per annum. You clearly fit that requirement.

As to who you can turn to in investing your ARF fund, there is fairly wide discretion. The default option is clearly the group with which you have held the AVC – in your case Eagle Star – and this is the option taken by many people. But there is nothing to stop you looking elsewhere. A wide range of financial advisers and life companies are pitching for ARF business.

In terms of advice, paid advice is generally the preferred option because, at least, you can be sure the advice cannot be tinged by financial incentives offered to the broker. Having said that, brokers are very rigorously regulated. Word of mouth is probably the most common method of choosing an adviser.

How will you know the best option? You will simply have to go with your gut instinct. As the current market conditions show, investment conditions are ruled more by confidence and emotion than by science.

• Please send your queries to Dominic Coyle, QA, The Irish Times, 24-28 Tara Street, Dublin 2 or by e-mail to dcoyle@irish-times.ie
• This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.